The US dollar is under siege, experiencing its largest currency decline since 1973 during the first half of 2025. Its 10.8% fall against a basket of currencies is directly linked to President Donald Trump’s economic policies, including his aggressive use of tariffs and a “big beautiful” budget bill that threatens to escalate the national debt. These factors have significantly eroded the dollar’s standing as a safe-haven asset.
The euro has benefited from the dollar’s struggles, rising by 5%. Meanwhile, expectations of US interest rate cuts, fueled by Trump’s public criticism of the Federal Reserve, have further weighed on the dollar. Despite this currency weakness, broader market returns have been surprisingly strong. The S&P 500, after a turbulent start to the year, surged to a record high by the end of June, indicating that while the currency faces headwinds, other segments of the market are finding strength.
